Understanding credit scores: how they work and how to check yours

What is a credit score?

A credit score is a number that lenders use to decide how reliable you are at repaying the money you borrow. It’s based on your credit history, financial behaviour, and other factors.

In the UK, there are three main credit reference agencies:

• Experian
• Equifax
• TransUnion

Each agency uses its own scoring system, so your score may look different depending on where you check it. Lenders might use information from one or more of these agencies when you apply for credit.

Your credit score is a helpful guide, but it’s not the only thing lenders look at. They may also check your income, job situation, spending habits, and what you can afford.

How is your credit score calculated?

Credit reference agencies base your score on information such as:

• your credit accounts, including loans, credit cards and mortgages
• your repayment history, such as whether you’ve paid on time or missed payments
• your electoral roll information, which helps confirm your identity and address stability

As a general rule, it's better to have a higher credit score than a lower one. Your credit score is a guide for lenders, but they also look at other financial details when deciding if you're eligible.

How do you check your credit score?

There are several ways to check your credit score, many of which are free and easy to use.

Credit reference agencies

Experian, Equifax, and TransUnion all offer free ways to view your credit score and report. You’ll also find tips on their websites to help you improve your score.

Credit monitoring services

Services like ClearScore use data from credit reference agencies and show you regular updates on your credit health. Most offer free access, with optional paid features.

Mobile banking apps

Many banking apps now include free monthly credit score updates. They often highlight what’s affecting your score and suggest ways to improve it.

Why does your credit score matter?

Lenders check your credit score and personal circumstances to decide if they can offer you credit. A higher score can mean better interest rates and more choice. It shows lenders how well you manage borrowed money and helps them avoid lending more than you can afford.

What are the benefits of a good credit score?

A good credit score can:

• increase your chances of being approved for credit
• help you borrow larger amounts
• give you access to lower interest rates
• save you money over time, especially for long-term borrowing

What to do next

Your credit score is only one part of your financial picture, but it can have a big impact on your borrowing options. Keeping your score healthy can unlock better financial options and save you money in the long run.